Norway Summary

last updated October 2004

Introduction

Norway’s highly liberal trade régime is characterized by nearly completely free trade in industrial goods. Significant trade barriers exist only to protect the agricultural sector, an issue that continues to draw criticism within the WTO framework. Services account for 56% of Norwegian GDP, while another 17% consists of petroleum and natural gas exports, the 3rd largest country share of the world market. Oil and gas make up 60% of exports, with manufactured goods consisting another 20% and fish 4%. [1]

As a member of the World Trade Organization (WTO) and the European Free Trade Association (EFTA), Norway is a strong advocate of trade liberalization, pushing for new countries’ admission into the WTO. EFTA has signed trade agreements with countries including Croatia, Chile, Jordan, Macedonia, Mexico, Singapore, Bulgaria, Croatia, Israel, Morocco, the Palestinian Authority, Romania, and Turkey. [1]

Norway has developed a nuanced and moderate position on global trade that simultaneously calls for greater global openness, as well as greater concern for issues such as environmental protection and for the needs of developing countries.

Agriculture

Norway’s high agricultural protections, which average 40%, draw criticism particularly because of the contrast they pose to Norway’s very open markets for industrial goods, which carry less than 1% average tariffs. It has also been criticized in a WTO report for high levels of state ownership and control in industries such as natural gas and aviation. The 2004 WTO report noted that the percentage of Oslo's stock exchange controlled by the state rose from 17% in 1999 to approximately 41% at the end of 2003, and expressed concern that this set a poor example for developing countries being encouraged to privatize state-controlled industry. [2] However, Norwegians are unlikely to make significant concessions on their agricultural policies, holding that more than global trade efficiency is at stake since domestic agriculture maintains rural settlement, cultural heritage, food security and public health. Norway’s position has also been praised by other countries who have been targets of similar criticism yet are unwilling to forego their commitment to domestic agriculture protections, including Japan, Korea and the EU. [3]

Concerns with environment, labor, and development

Environmental protection is an important issue of Norwegian public opinion. Norway wants to integrate social and environmental concerns into the WTO; at the very least, it seeks a comprehensive assessment of the environmental impact of further liberalization and future WTO policies. Norway, alongside Switzerland and Canada, made a huge step in November 2002 towards a more integrated environmental policy within the WTO when they managed to convince the G77 group of developing countries, as well as the EU, to support their objection to a WTO proposal which would give precedence to trade over the environment.

Norway’s concern for social issues also influences its policy on labor rights. Norway, along with many other developed nations, seeks dialogue on labor standards with the eventual goal of integrating core labor standards into WTO disciplines, despite its knowledge that developing countries will oppose this. It participates actively in meetings of the International Labor Organization (ILO), and has ratifies all major conventions relating to labor standards.

Norway’s foreign and development cooperation policies have recently been more and more shaped by its trade policies towards developing countries. The percentage of GDP allotted towards foreign aid donations - nearly 1% - ranks Norway, in the company of its fellow Scandinavian countries, as the most generous of all developed countries. [1] Norway has also been historically on the frontier of WTO advocacy for developing countries, pushing for access to generic drugs during the Doha Round of negotiations, and enacting national policies including duty-free imports from least developed countries (LDCs). [3] Norway supports regional trade agreements as well as a greater level of integration between developing countries, in the form of improved market access and local agreements, and is a strong advocate for WTO technical assistance to LDCs. It has stated it believes that the program should be financed from the WTO’s regular budget, rather then from voluntary contributions.

Trade liberalization and investment policy

Norway favors extensive liberalization for trade in services. Because Norwegian service providers are highly competitive and technologically advanced, it is in Norway’s interest to encourage better market access for service exports. It also favors as broad a range of sectoral coverage as possible. Land and maritime transportation services are the largest Norwegian service sector. [1]

As a country that pioneered trade liberalization in Europe as one of the founders of the WTO, Norway seeks to ensure that its trade relations with EU’s new members are not adversely affected by the introduction of protective tariffs. Recent negotiations allow Norway to seek compensation from the EU for the harm these restrictive measures can have on its exports and imports. In 1995 Norway adopted European Economic Area (EEA) rules guaranteeing national treatment for foreign investors and liberalizing regulations constraining foreign investment in industrial companies. Despite this, the Norwegian government still restricts investment in certain sectors, including financial services, mining, hydropower, and some real estate and land.

At this time, Norway does not support including investment policy on the agenda. It has noticed the extensive dissension caused by the Organization for Economic Cooperation and Development's (OECD) attempt to establish a Multilateral Agreement on Investment (MAI), and believes that investment policy must be studied further to examine its effects on developing nations.

The Future

Despite involvement with the WTO, Norway is still pursuing its own trade-liberating policies. As a member of the EFTA, whose other members include Iceland, Lichtenstein and Switzerland, it continues to pursue new more expansive trade deals with many countries.

The most important item for Norway remains its ongoing discussion with the WTO on the subject of agricultural tariff reduction, which it fiercely opposes. Along with other countries such as Switzerland, Japan and South Korea, Norway will likely continue to lobby the WTO to include non-trade environmental issues into its laws, and to give heightened consideration to the potential that trade laws hold for development of poorer countries. The contrast between Norway’s progressive stance on issues such as the environment and development and its conservative views on agricultural liberalization may draw more scrutiny if the issue of developed country agricultural protection continues to be the bone of contention in the ongoing Doha Round of WTO negotiations.